Many government employees working in noncovered employment have no idea of the special rules that may affect their future Social Security benefits. As a result, these employees may expect to receive significantly more retirement income than will actually be paid. Contributing to this problem is the fact that Social Security Administration (SSA) itself does not know who is affected by the government pension offset or the windfall elimination provisions until the individuals apply for benefits and disclose that they are receiving pensions based on noncovered employment. Until then, the personalized earnings and benefit estimate statements that SSA provides upon request will overstate potential future benefits. This can impede sound financial planning.
Author: Bruce D. Schobel, FSA, MAAA, CLU, CEBS, is a consulting actuary in Sunrise, Florida, who worked for SSA during 1979 through 1988 and has stayed involved in Social Security matters since then. He was staff actuary to the National Commission on Social Security Reform (the “Greenspan Commission”) that developed the framework for the Social Security Amendments of 1983.